Taxation (Cross-border Trade) Bill (Fourth sitting)

Kirsty Blackman Excerpts

Thursday 25th January 2018 Public Bill Committees

[Peter Dowd]

The Government have done precisely the same thing in relation to scrutiny—they have turned it off.

As I said, we cannot allow this to be left to the whims of a Minister, because as has been suggested in the last day or two, the amount of Ministers coming and going has been vast, and it is causing a certain amount of dissonance in the operation of Government from what I can gather, and from what the report says. So, we cannot have a system that is at the whim of this dissonance, so to speak, in two or three years’ time—whichever party is in power.

Ultimately, this comes back to the phrase by James Otis, which must have been quoted millions of times in the House in the three or four centuries since it was spoken: “No taxation without representation”, because that leads to tyranny.

[Kirsty Blackman (Aberdeen North) (SNP)]

It is a pleasure to be here and to have you in the Chair this afternoon, Mrs Main. We support new clause 1, which has been tabled by the Opposition, and we would be happy to support it if they decide to put it to the vote.

I have concerns about clause 8 because of the deficiencies that we discussed earlier. I hope that, by Report, the Government will have come back to some of the suggestions that the official Opposition and the Scottish National party have made, and given them some level of consideration. Although clause 8 has deficiencies, it is my working assumption that even if we were in a customs union—which would be my preferred option—we would still need to set our tariffs and to lodge those schedules with the World Trade Organisation, so, even in the event of the UK being in a customs union with the EU, I imagine that there would still be a requirement for the Government to have the power to set tariffs.

On that basis, clause 8 is necessary whether or not the Government decide to come out of the customs union or to pursue a customs union. So, although it is deficient, we need to do something. It would be useful if the Minister was to say that he might consider coming back on Report to some of our amendments—even if he said he would consider it, that would be incredibly helpful—but as I said, we will support Labour’s new clause.

[Mel Stride]

It is a pleasure to serve under your chairmanship, Mrs Main. I thank the hon. Member for Bootle for his remarks. His usual brilliance was enhanced by an unknown quality of being able to summon dramatic music to enhance his comments. He gets better and better, the longer we hear from him.

The hon. Gentleman raised various general points, including the fact that this is, in effect, a Finance Bill and therefore will not be amended in the House of Lords. There are good reasons for that. There is a very, very long tradition for Bills that relate substantially to tax and the rating of charges to be handled in that way—both by this Government and by Labour, when it was in government.

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Preferential rates: arrangements with countries or territories outside UK

[Kirsty Blackman]

I beg to move amendment 107, in clause 9, page 6, line 24, leave out “may make regulations” and insert

“must make regulations following consultation with relevant stakeholders”.

This amendment requires the Treasury to consult relevant stakeholders before making regulations giving effect to an arrangement for a preferential tariff.

To explain the reasoning behind our amendment I need to mention a couple of things in the clause. It is headed, “Preferential rates: arrangements with countries or territories outside UK” and the explanatory note explains more about those:

“This clause broadly covers any arrangements, international agreements or memoranda of understanding”.

Therefore it relates to whenever there is a move away from a most favoured nation tariff into a free trade agreement, or some other form of preferential tariff rate.

This short amendment would make two changes to the Government’s intentions around the clause. First, it would leave out “may make regulations” and insert “must make regulations”. In subsection (1), the Bill states that,

“the Treasury may make regulations to give effect to the provision made by the arrangements”.

If there has been an international agreement, surely the Treasury must make regulations, because that would be sensible. That is the first change we suggest.

The second change we suggest is on consultation. It is clear that there has not been the right level of consultation. The Government have said that if they are varying the rate of import duty downwards rather than upwards, there should be a less rigorous procedure, but if the rate of import duty is varied downwards, that may have a greater effect on our local producers and manufacturers. The amendment asks for there to be “consultation with relevant stakeholders” in advance of not just international agreements, but any of these changes.

When the Government are deciding to make international regulations, it would be useful if they first consulted the House using the existing processes. I understand that most Governments across the world make trade regulations with the authority of the House, rather than simply by the authority of the Executive. In the absence of those kinds of changes, which are outside the scope of the Bill, we are asking for the Government to definitely make the regulations—if they are bound by an international treaty or agreement, it would be sensible to do so—but to consult with relevant stakeholders. We want to put that duty of consultation on the Government.

[Peter Dowd]

The points that the hon. Lady makes hit the nail on the head in relation to engaging with those who will be affected by the legislation. I fully understand where she is coming from.

The clause allows the Government to introduce through regulations a lower preferential rate of duty applying to goods originating from specific territories. It also covers a broad range of situations, including arrangements between the UK and a British overseas territory, free trade agreements negotiated with Britain and other countries, and a possible customs arrangement with a large economic regional organisation such as the European Union. Preferential trade agreements comprise a variety of arrangements that favour member parties over non-members by extending tariff and non-tariff preferences. PTAs, particularly free trade agreements, have proliferated in recent years. In the post-war period, the EU has developed the largest network of PTAs in the world. The explanatory notes state:

“The ability to use a preferential rate under an arrangement may be subject to any conditions specified in the arrangement, including…quotas, rules of origin or safeguard measures.”

Given that context, it is important that stakeholders are taken into account, as the hon. Lady says. There could be a wide range of stakeholders, and the proposal suggested by the Minister did not go far enough. He almost seemed to suggest that everybody is included, but everybody is not included if the Secretary of State does not want to include them. The clause presents another example of the litany of delegated powers found throughout the Bill. The Treasury takes immense powers without proper consultation right across the board.

Clause 9 is beyond vague when it comes to explaining what consideration the Treasury will make when introducing regulations that will pave the way for offering preferential rates. The clause leaves a range of questions unanswered, particularly around the test that the Treasury will put in place before preferential rates can be included.

I am sure that all members of the Committee agree that reciprocal preferential rates are the foundation of free trade agreements. Again, that goes to the heart of who is to be consulted on this one, and the clause gives a free hand to introduce regulations that will create preferential rates and seem to open the door to the Treasury to—

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[Mel Stride]

As the hon. Member for Aberdeen North has said, the amendment seeks to do two things. It would require the Treasury to consult before giving effect to a trade arrangement that has been agreed with another territory or country, and to make regulations in such circumstances.

To take the first of the points, any consultation on regulations made under clause 9 would not be meaningful as the Government would not be in a position to take account of the views received without withdrawing or renegotiating the agreement reached. As set out in the trade White Paper, the Government have committed to engaging stakeholders throughout the process of negotiating new trade arrangements.

On the proposed requirement for the Treasury to make regulations, it goes without saying that the Government are required to meet their international obligations in the trade agreements that they have entered into. The word “may” is used, however, because there might be unforeseen circumstances that make it inappropriate for the Treasury to be obliged to lay regulations. As I say, however, the Government will of course be bound their international obligations.

On that basis, I urge the Committee to reject the amendment.

[Kirsty Blackman]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

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[Kirsty Blackman]

New clause 2 is, for a variety of reasons, one of the most important measures we will discuss in the three days of debate we will have on the Bill. The clause is very important. I mentioned earlier that reducing tariff rates could have a significant impact on manufacturers in the United Kingdom as well as on agricultural producers, which is a major concern, particularly in more rural parts of the UK.

This measure looks at preferential rates under conditions specified in an arrangement including, for example, quotas, rules of origin and safeguard measures. It is about not just reducing tariff rates for the total number of goods coming in from one country, but reducing the number of those under a certain quota or having a differential rate, depending on the amount of goods coming in—it is a bit more complicated than it may look.

The UK Government will go away and negotiate trade deals with other countries, and the Bill will allow the Treasury to put regulations into place. The UK Government would be more likely to negotiate better trade deals if they knew that they had to justify them to Parliament, get its approval and go through a more rigorous approval process after that. Given the concerns that the Scottish National party has raised consistently about changes that this and previous Governments have made in different areas that we feel have negatively affected either our constituents or manufacturers, producers and companies who work in the United Kingdom, and in Scotland specifically, we do not trust the Government to go away and negotiate trade deals that will be good for outlying parts of the UK, particularly those not in the south-east of England.

If Ministers had to justify themselves to Parliament more—if they had to convince us that they had struck a good deal—it may be that when they were sitting round the negotiating table, they would come up with a better deal because Parliament would be more likely to approve it. That is why new clause 2 is important. Any move by any country away from most-favoured-nation tariffs could have an impact on companies that work in our country as well as on consumers. As parliamentarians, we want to provide a level of protection for them, which is why we will support new clause 2.

[Mel Stride]

Clause 9 allows the Treasury to implement preferential trade arrangements on the recommendation of the Secretary of State. That will enable the rate of import duty applied to goods originating from a territory covered by a preferential arrangement to be lower than the standard rate.

The clause ensures that the tariff-related part of any new or existing free trade agreement can be implemented and enables the UK to continue the treatment that the British overseas territories currently receive. The Bill does not give the Government powers to sign such agreements but to implement the tariff parts of them.

The clause is essential to ensuring that the UK can implement any tariff outcome from negotiations with the EU. The Prime Minister has been clear that our aim is to secure a tariff-free trade deal with the EU. As a member of the EU, the UK is part of around 40 free trade agreements with countries and territories outside the European Union. When the UK leaves the EU, the Government are committed to seeking continuity in our trade relationships, including those covered by the EU’s FTAs or other EU preferential arrangements.

[Kirsty Blackman]

How is that going?

[Mel Stride]

That is a specific question for the Department for International Trade, but think all the indications are that we have been out speaking to many potential trading partners.

[Kirsty Blackman]

And current trading partners?

[Mel Stride]

Current trading partners and others. Obviously, as an EU member, we are bound not to enter into any other arrangements prior to our departure, but I am confident that we are having appropriate conversations at this stage of our withdrawal.

In addition, as set out in the trade White Paper, after leaving the EU, the UK will have the opportunity to

“look to forge new and ambitious trade relationships with our partners around the world”.

Clause 9 provides a basis for those aims.

The clause enables the UK to implement preferential import duties on goods originating in territories covered by a preferential arrangement. That will cover arrangements made bilaterally with a Government of another territory. A recent example is the comprehensive economic and trade agreement between the EU and Canada.

The Bill refers to making arrangements to allow preferential rates of import duties to apply before an agreement is ratified. That is common when implementing FTAs and is the case under the comprehensive economic and trade agreement, which has been provisionally adopted but is not yet fully ratified.

The clause will also enable the UK to continue to provide preferential tariff treatment to those British overseas territories, including the British Virgin Islands and the Falkland Islands, that currently receive that access under the EU via the overseas association decision.

As I was looking through new clause 2 during the hon. Member for Bootle remarks, my eagle eye spotted what I think is an error. Although subsection (1)(a) of the new clause would do what is intended—that the first regulations to be made under clause 9 will be subject to the provisions of the new clause—the explanatory statement and the points made in his speech suggest that subsection (1)(b) should relate to instances where there has been a lowering of import duties. In fact, as currently drafted, subsection (1)(b) refers to

“the effect of which is an increase in the amount of import duty”.

I can only imagine that that is a drafting error or has been lifted from new clause 1, which does refer to the increase in import duties. However, I fully understand what the hon. Gentleman intended, and I will deal with new clause 2 on the basis of its intention and of the way in which he describes it in the explanatory statement.

The new clause would put in place an additional parliamentary process for regulations giving preferential import duty arrangements to other countries. As I previously set out, for indirect tax matters, it is common to have framework primary legislation supplemented by secondary legislation. The Bill introduces a comprehensive framework for a new stand-alone customs regime. It ensures that the scrutiny and procedures that apply to the exercise of each power are appropriate and proportionate, taking into account the technicality of the regulations, the frequency with which they are likely to be made and how quickly the law may need to be changed.

Clause 9 allows the Treasury to give effect to the tariff section of trade arrangements once they have been negotiated. It is therefore appropriate and proportionate for the negative procedure to apply. Any delays in implementing preferential duties in trade arrangements could have significant impacts on UK supply chains or exporters who rely on the arrangements. As set out in the trade White Paper the Government are considering how to ensure that the process for negotiating new trade deals is transparent, efficient and effective, and we will ensure that Parliament is engaged throughout.

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[Anneliese Dodds]

I did not say “any”. I said that there would not be scrutiny of the type that is necessary and of an appropriate thoroughness, which would not be of a one-shot nature whereby it is difficult to have the kind of debate that we all think is necessary, given the impact that the provisions could have on major sectors of our industry.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

Clause 10

Preferential rates given unilaterally

[Kirsty Blackman]

I beg to move amendment 108, in clause 10, page 6, line 35, at end insert—

“(1A) The Secretary of State must consult on a proposed version of any regulations to be made under this section before making them.”

This amendment requires the Treasury to consult prior to making regulations establishing preferential rates for developing countries.

The amendment is about consulting on a proposed version of any regulations to be made under the section before making them. This would make sure that relevant people are consulted in advance, specifically in the case of unilateral preferences. The Minister previously argued about the processes that are gone through in advance of the signing of international agreements, but those are slightly different in relation to this clause. We are specifically talking about consultation. Again, we have been clear that there is not enough consultation throughout, and more consultation would be appropriate.

As amendment 108 is about unilateral preferences, we think that consultation is necessary. It is absolutely clear that unilateral preferences, particularly those relating to these provisions, and the reasons for unilateral preferences, are good—they are sensible in relation to our least developed countries—but we must also ensure that relevant stakeholders are consulted.

[Anneliese Dodds]

I agree with much of what the hon. Lady said. We heard on Tuesday some of businesses’ concerns about consultation even relative to the Bill. It is important, when we move on to its exact provisions, that we have proper consultative mechanisms. I have certainly benefited hugely from the input into the process around the Bill and information from the Fairtrade Foundation and Traidcraft. If this Government are truly committed to policy coherence for development, it is important that they ensure that non-governmental organisations with expertise on the ground in international development can comment on preferential trade decisions, which could have a significant impact on different nations.

I was encouraged by what the Minister said to me when we talked about ensuring policy coherence for development when it comes to tax treaties. We need to ensure that that is the reality for our preferential trading regimes as well. One way to do that is by having appropriate consultation with experts in the area.

Finally, the Library note to the Bill, which was enormously useful as always, says that,

“the Government argues that the negative procedure is appropriate here as regulations might be lengthy, technical, frequently changed, not yet known and/or administrative.”

The note goes on to indicate what the EU process is for such schemes. It is quite different from what the Government propose:

“The regulations setting out the current EU scheme…were adopted by the EU Parliament and Council”,

meaning that there was debate within both those organisations. Our country is represented in the Council, and our MEPs represent us in the European Parliament. Then there are

“provisions allowing technical/routine updates through Commission delegated regulations.”

Again, delegated regulations can involve thorough scrutiny. I suggest that in many ways, it is far easier for an MEP to trigger a debate on a piece of delegated legislation on the Floor of the European Parliament than for an MP to do so in the British Parliament, certainly when the negative procedure is used, but also, potentially, when the affirmative procedure is used, given the arithmetic of Committees mentioned by the hon. Member for Aberdeen North. It is enormously important that we have proper scrutiny of such provisions. One way of embedding that is by having appropriate consultation. We support the amendment.

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However, the scheme must be regularly updated to adapt to global changes. That is to reflect, among other things, objective criteria such as the development level of beneficiary countries and trade flows of different products. A statutory duty to consult on all such changes would delay the efficient operation of the scheme. It could reduce the effectiveness of unilateral preferences for around 70 developing countries. I do not think that the hon. Member for Aberdeen North would want to see that happen. I therefore ask her to withdraw the amendment, although I understand why they were tabled —to probe the Government on this important issue.

[Kirsty Blackman]

I appreciate the Minister speaking on these matters in Committee, and I welcome him to his place. He is absolutely right about the importance of the preferential trade agreements, but perhaps we had a slight misunderstanding. I am not suggesting that opposition to such agreements would be likely. It is just that some organisations such as Fairtrade and Traidcraft have been in touch with us, and they might have better insight into what is happening on the ground in some of those countries. They might be able to provide more information to ensure that the preferential tariffs being provided unilaterally are the most appropriate ones.

The amendment is not about trying to create a blockage in the system. My reason for moving it is not about protecting our industries, but about ensuring that the best possible preferences are put in place for those countries that most need them. That is more likely to happen if there is an opportunity—a requirement, I suppose—for the Government to consult, in particular those bodies and organisations working in the country which can be absolutely clear about the best way forward for any trade deals.

If the Minister is clear that he will consult, that is useful. However, I intend to press the amendment to a vote.

[Graham Stuart]

I am disappointed that the hon. Lady will press for a Division, not because the points she has made are not important, not because the Government should not consult and listen to those voices, and not because we should not seek to improve our programme of support for developing countries, but because to put consultation in at that particular point in the process will not deliver the outcome that she desires and might in fact cause damage to the very system that we all want to see improved and working properly after having taken such consultation.

We are in regular contact with external stakeholders. We hold roundtables with representatives of civil society, business and academia, and we have received about 20 responses on trade with developing countries as part of the White Paper consultation. We have heard support from some of the organisations that the hon. Lady mentioned for creating a UK preference scheme, and an understanding of our approach to maintaining in the first instance existing levels of market access as we leave the EU. In effect, we are replicating the system we have now. In the oral evidence earlier this week, the Committee heard someone from the Fairtrade Foundation say of the measure:

“It takes the best bits of current EU policy and brings them over into UK policy.”––[Official Report, Taxation (Cross-border Trade) Public Bill Committee, 23 January 2018; c. 21, Q23.]

In some areas, stakeholders have suggested changes for the future, including extending to more countries, simplifying rules and adding more products. All of that can be considered by Government. I suggest to the hon. Lady that it is not too late not to press this amendment to the vote, because I do not think it is appropriate, although I take on board entirely the points she is making.

[Kirsty Blackman]

I still intend to press this to a vote.

Question put, That the amendment be made.

Division 4

Ayes: 8

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Labour: 6
Scottish National Party: 2

Noes: 10

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Conservative: 9

[Kirsty Blackman]

I beg to move amendment 109, in clause 10, page 7, line 5, at end insert “and—

(c) may make provision about the restoration or reinstatement of the nil rate band.”

This amendment places beyond doubt that regulations may reinstate the nil rate band after suspension or withdrawal.

This amendment comes from the Law Society of Scotland. It was a kind of tidying-up exercise that we suggest would be helpful in the clause. Clause 10(3)(b) allows the trade preference scheme to

“make provision about the suspension and withdrawal of the application of the nil rate.”

I am sure this is unintentional, but it does not make provision to reinstate or restore the nil-rate band, if it is necessary to do so. It is just a slight technical change suggested by the Law Society of Scotland, allowing for the restoration of the nil-rate band if that is what the Government need to do.

[Anneliese Dodds]

This seems like a sensible amendment, particularly because accessing that nil rate is crucial for so many nations. If there is ambiguity around the conditions, they need to be clarified. Definition, initially, as a least-developed country, is partly with reference to vulnerability to economic shocks. Inability to access that nil-rate, or inability have it reinstated when it should be, could cause economic shocks. As we know, the value of access to the nil-rate to UK markets for least-developed countries is incredibly important—it is £323 million a year. It is important that we have no ambiguity and are absolutely crystal clear.

[Graham Stuart]

As we have heard, the amendment seeks to clarify that the regulations may provide for the restoration or reinstatement of the nil rate of import duty to least-developed countries where this has been suspended or withdrawn. It is clearly important that we can reinstate preferential rates of import duty after they have been suspended or withdrawn, but the Government do not believe that the amendment is required. The existing power enables the withdrawal or suspension of preferences to least-developed countries to be partial and reversible. That is in line with the general principles relating to regulation-making powers. It goes to show that even when you deal with lawyers as eminent as those at the Law Society of Scotland, they sometimes get it wrong, even technically.

The Government intend to use the power to suspend sparingly and, if used, we will work with the relevant country with a view to reinstating preferences as soon as is appropriate. For trade preferences to be effective, they must be relatively stable, so that businesses have confidence to make decisions to import from beneficiary countries. I therefore ask the hon. Member for Aberdeen North to withdraw the amendments and give a categorical assurance that a provision to do what they suggest is already in place.

[Kirsty Blackman]

Having looked at subsection (2), I still do not think it is particularly clear. It says that the scheme can make provision about the withdrawal, but then does not make clear that it can be reinstated. I will not press it to a vote because I hope the Government will table an amendment on Report to make it clear that they have the ability to reinstate the rate. I would not like a situation in which the Government were unable to do so because there was a challenge around the language used in the law. The amendment seeks to make it as unambiguous as possible. The hon. Member for Oxford East was absolutely clear on the importance of nil rates, particularly in relation to economic shocks. SNP Members would echo that. I am not going to press it to a vote, but I would appreciate it if the Minister would consider returning to the matter on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 80, in schedule 3, page 57, line 18, at end insert “among other things”.

This amendment provides that the Secretary of State may have regard to things other than the classification of least developed countries by the UN in amending the list in Part 2 of Schedule 3.

That schedule 3 be the Third schedule to the Bill.

Amendment 10, in clause 32, page 19, line 32, after “which” insert

“section (Preferential rates given unilaterally: enhanced parliamentary procedure, etc) (7) applies and”.

This amendment is consequential on NC4.

New clause 4—Preferential rates given unilaterally: enhanced parliamentary procedure, etc—

(1) No regulations may be made by the Treasury in exercise of the power in section 10(1) except in accordance with the steps set out in subsections (2) and (4) to (6).

(2) The first step is that a Minister of the Crown must lay before the House of Commons—

(a) a statement on the matters specified in subsection (3); and

(b) a draft of the regulations that it is proposed be made.

(3) Those matters are the reasons for—

(a) the proposed application and non-application of the scheme to each country listed in Parts 2 and 3 of Schedule 3;

(b) any proposed conditions for the application of the lower rates or nil rate, and

(c) any proposed provisions about the variation, suspension and withdrawal of the application of the lower rates or nil rate.

(4) The second step is that a Minister of the Crown must make a motion for a resolution in the House of Commons setting out, in respect of proposed regulations of which a draft has been laid in accordance with subsection (2)(b)—

(a) each country to which the proposed regulations apply;

(b) the proposed conditions for the application of the lower rates or nil rate, and

(c) the proposed provisions about the variation, suspension and withdrawal of the application of the lower rates or nil rate.

(5) The third step is that the House of Commons passes a resolution arising from the motion made in the form specified in subsection (4) (whether in the form of that motion or as amended).

(6) The fourth step is that the regulations that may then be made must, in respect of any matters specified in subsection (4), give effect to the terms of the resolution referred to in subsection (5).

(7) No regulations may be made under the following provisions unless a draft has been laid before and approved by a resolution of the House of Commons—

(a) section 10(4)(a) (meaning of “arms and ammunition”);

(b) paragraph 2(1) of Schedule 3 (power to add or remove countries from lists in that Schedule).

This new clause establishes a system of enhanced parliamentary procedure for regulations setting lower import duties for eligible developing countries, with a requirement for the House of Commons to pass an amendable resolution authorising the key provisions of the proposed regulations, and also requires that certain other regulations are subject to the affirmative procedure.

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[Kirsty Blackman]

Quotas have concerned us for some time, particularly the question of how they will happen post-Brexit. I understand what the Minister is saying, and I have read the clause and understood what it says about the regulations and how quotas will be put in place by this Government, but I am still not entirely clear how those quotas will be decided in advance and what circumstances will be used to decide an appropriate level of quota. I am not sure if the plan is for that to follow in regulations. I have tried to work it out from the legislation before us; it may be in the Trade Bill rather than this Bill.

Quotas are important, particularly on agricultural products. If our farmers can only produce a certain percentage of the beef consumed, we must allow a certain amount of beef into this country, but not so much that our farmers will be squeezed. We must protect our farms here. It is about ensuring balance.

The UK and the EU Commission agreed in September 2017 how they would divide the quotas currently in place. They agreed that the tariff rate quotas lodged with the WTO would be divided on the basis of consumption. For example, there is a tariff rate quota for sugar cane. Sugar cane is consumed mainly by the UK—the EU generally uses not sugar cane but sugar beet, which it grows itself—so it makes sense for a more significant proportion of the quota to go to the UK than to the EU. Division by consumption seems like a relatively sensible way to do it.

[Julian Sturdy (York Outer) (Con)]

Actually, a lot of sugar beet is produced in the UK, as well as in Europe.

[Kirsty Blackman]

That is absolutely the case, but generally the sugar cane that comes into the UK and the EU is consumed in the UK; very little of it is consumed in the EU. This is specifically about the consumption of sugar cane, rather than about the production of sugar beet. I understood that probably most of the sugar beet produced in the UK is not for human consumption, but I could be wrong in that regard. I am happy to chat to the hon. Gentleman afterwards, if he is keen.

[Julian Sturdy]

I will have to be careful what I say here but, without promoting British Sugar too much, if someone sees Silver Spoon in the supermarket, that is British sugar produced by British Sugar.

[Kirsty Blackman]

I thank the hon. Gentleman for that clarification. I appreciate that his knowledge of sugar is better than mine.

On quotas in particular, the situation is that the UK and the EU Commission have now decided how to divide the quotas and the amount that is lodged as a schedule with the WTO. However, in September 2017, Uruguay, Canada, Thailand, Argentina, Brazil, New Zealand and the US wrote a letter to say that they contested the way in which the UK and the Commission had decided to divide up the quotas, and that they had a concern about the decision taken. I can understand that concern.

For example, let us say that beef is coming into the UK and the EU. If we have a collapse in the beef market in one of those places, the beef cannot simply be redistributed to other countries. That is particularly so in the case of the UK. If the UK ends up with a tenth of the EU’s quota for beef, and the quota allows for 100 tonnes of beef, 10 tonnes of that are a quota allocated to the UK. If something strange happens in the UK, everyone decides that they do not want beef burgers or steaks any more and the market collapses, the country exporting the beef to the UK cannot just send it to another country, because the UK schedule will be the UK schedule alone.

I can therefore understand why countries are unhappy with how that division is working and why they have come back to say that they do not think it is a technical rectification. That is a serious thing in the WTO, because if the change of quota is not a technical rectification but a modification of the schedule, it needs to go through more of a process in order to be agreed.

My big concern is that none of that seems to be in this legislation. None of the way in which the UK Government will be dealing with the WTO on quotas or defending itself against challenges brought to the WTO seems to be in the Bill. While I am on the subject, to throw the cat among the pigeons, I have not seen anything in the European Union (Withdrawal) Bill, in this Bill or in the Trade Bill that gives the UK Government the power to lodge schedules with the WTO. I hope the UK Government have not missed that and it is written somewhere in one of the pieces of legislation, because it would be rather unfortunate if the UK Government were, post-Brexit, unable to lodge schedules with the WTO or to have its most favoured nation tariffs lodged with the WTO.

I hope that that power is in one of the pieces of legislation—I am happy for the Minister to come back to me and mention it afterwards—because clearly we want to be in a situation in which, post-Brexit, the UK continues to be a functioning country and is able to have tariffs, not just preferential ones but most favoured nation ones as well. Generally, I have concerns about the provisions on quotas because I am not sure that they adequately fulfil all the things that the UK will need to do on quotas.

I have thrown an awful lot of things at the Minister—not literally, I hasten to add for anyone reading this later—and I am happy for some of them to be dealt with at a future sitting. My concern, however, is that because we are leaving the EU and doing so in a short period of time, so legislation has been hastily drafted, some things might be missing. If that is indeed missing, that would be amusing because it is pretty fundamental going forward. I will appreciate the Minister’s providing some clarification, if he can, on the clause.

[Peter Dowd]

Our new clause 3 would require the House of Commons to pass an amendable resolution authorising the key provisions of the proposed regulations. It would also require that regulations establishing a licensing or allocation system are subject to the affirmative procedure.

As with the other related new clause we have discussed today, there are four steps set out in our proposed process. First, the Minister lays a statement to the House along with the draft regulation that is proposed to be made. Secondly, the Minister lays a motion setting out the various duties and tariffs that the Government wish to impose. Thirdly, the House would have to pass a resolution on that motion. Finally, the regulations will be made. Amendment 11 is consequential on the above, making a small technical change to clause 32 to accommodate our proposals.

Ultimately, however, we are less concerned with the exact steps for any process for ensuring parliamentary oversight. We just want to see that the Government are acting on the principle that Parliament should have an extended role in scrutinising the changes in this regard. As I have said previously in relation to the other clauses, we seek to guarantee an enhanced parliamentary process. The logic is pretty undisputable. The Government have tabled this Bill as a financial Bill, as I referred to earlier on. In that regard, the House of Lords does not have any capacity to scrutinise it and the Commons does not have the same capacity it usually would. We ask, therefore, that as in all other financial matters a case is presented to the House for a debate and a vote.

It would be a very unfortunate outcome if the Treasury was to acquire powers to alter the rate of taxation without such basic democratic processes. The Government really should think a little longer than this—it is not a short-term matter. It is of course more conceivable that they may be in opposition sooner than they think. They should be looking to construct a fair process for scrutiny, with, in effect, cross-party agreement as to what that would be, in the light of this significant change that we are about to face in one way or another, maybe within the next 12 months or so, possibly a little longer, but the reality is that we are facing change. This House has to face up to the fact that scrutiny processes need looking at, especially with regard to finance.

[Mel Stride]

The hon. Member for Aberdeen North rightly raises the issues around quotas. First, we have to work out what those quotas will be. We have existing arrangements through the European Union and we are currently in discussions regarding, as she has suggested, how the various quotas should be allocated, whether that be on the basis of consumption, or consumption and other issues that we might consider. The point I would make on that is that this Bill is enabling, in that sense, rather than prescribing or seeking to suggest any particular outcome to those discussions.

In the hon. Lady’s second point she raised an example of 100 tonnes or 100,000 tonnes of beef, and a certain amount coming by way of a quota to the UK, and then circumstances of that changing not to our liking, and asked what we would do in such a situation. That prompts the question as to where the quota itself originated.

[Kirsty Blackman]

I am sorry; I was obviously not particularly clear when I was making that case. I was suggesting that this was why third countries are upset about how the division might work, because 90 plus 10 is not the same as 100 in a bigger area, because they cannot just redistribute that in the event of a market collapse in the UK, because the 10 is for the UK and they cannot just send that to the EU, because the quota for the EU is now only 90.

[Mel Stride]

I think I have the gist of the point. In terms of the overarching point about what one would do if the arrangements come to be seen, in the way they are measured, as being inappropriate, that prompts the question where the quotas originate in the first place. If it is in the schedule of concessions at the WTO, I guess we would have to revisit that aspect of it. If it comes from provisions within a free trade agreement, I guess we would attempt to renegotiate that aspect, or perhaps trigger some provisions within that agreement to resolve the issue at hand. If it was a so-called autonomous quota in which we had decided to implement a quota regime or quotas at the request of a third country, I imagine that we would be able to reverse or change that in some way through secondary legislation as well, depending on the precise nature of that agreement.